The down payment is really the only thing that stands between you and your ability to become a homeowner.
But unlike what most people think, down payments can actually be looked at as an opportunity instead of an obstacle.
A bigger down payment allows you to have more choice when it comes to purchase price range and monthly payment amount. It will also give you that priceless feeling of peace of mind once you move in your new home.
If you are aiming to go for a bigger down payment but don't really know how, here are 5 lesser-known sources of money for that cash cushion according to Trulia:
Lean on your city
What were then known as zero-down loan, federal homebuyer tax credit, and tax credit funds have now gone local.
Local government, primarily cities and counties, now largely operates these programs. The rules for qualifying vary from buyers with low or moderate incomes, and some prioritize helping first-time homebuyers. The budget is limited and may require buyers to complete several requirements such as homeowner education classes and meeting specified criteria for choosing a home.
You can Google your city, county, and state websites, and find links for residents, housing, or homebuyer assistance to find these programs and help you generate down payment money.
Get by with a little help from your friends and family
There are mortgage programs that let you use "gift money" as a portion of your down payment. However, as lovely as it may sound, it's almost expected to end up having relationship issues for taking gift money from a relative.
For lenders, the gift money should be accompanied by a letter that guarantees the money as a gift and not a loan. A bank account statement may also have to be presented by the giver to prove that the money was theirs to give.
Ask your employer
First responders like police and firefighters can be offered assistance for down payment by universities and municipal departments that employ them. If you are a top-level recruit, employers, big or small, would likely offer you a relocation assistance program.
It would not hurt to check with human resources if there is available relocation or down payment assistance in your offer package.
Tighten your budget
Prioritize your goals. If buying a home is on top of your list, then maybe it's time to assess your spending and look for the leakage you can stop. That's money that could go to your down payment savings.
Instead of spending $20 a workday for oatmeal and coffee for breakfast and takeout lunch, consider bringing lunch from home and save $400 per month or $5000 a year. Now that's some down payment saving!
Borrow from yourself
One way you can borrow cash from yourself is through your 401(k) or IRA. There are retirement accounts that can help you with your down payment for a home by letting you borrow or pull out funds, penalty free. However, it is not advisable in every situation.
But, if borrowing from your 401(k) can get your down payment to the 20% mark which means lower mortgage interest rate, it could be the right move for you.
